OREANDA-NEWS. Facing a challenging economic environment, Braskem recorded net revenue of BRL 11.8 billion in the first quarter of 2014, or 10% more than in the fourth quarter of 2013. The performance of net revenue in the period is explained by the appreciation in the U.S. dollar against the Brazilian real and by the recovery in petrochemical prices in export markets fueled by stronger global demand.

In Brazil, domestic demand for thermoplastic resins in the quarter came to 1.3 million tons, in line with the previous quarter. Meanwhile, Braskem's sales amounted to 901 kton, virtually stable in relation to the fourth quarter of 2013. Compared to the same period of 2013, domestic demand grew 3%, driven by the good performance of industries focused on nondurable goods, while the Company's sales decreased 2%.

In the first quarter, Braskem's crackers registered an average capacity utilization rate of 85%, which was affected by the scheduled maintenance shutdown on the main line of the Triunfo Complex in Rio Grande do Sul and by certain isolated events at the petrochemical complexes in Duque de Caxias, Rio de Janeiro and Maua, Sao Paulo.

In line with its strategy to concentrate its investments in the petrochemical industry, Braskem sold to Odebrecht Ambiental the assets forming its water treatment unit at the Triunfo Complex, with the divestment generating a gain of BRL 277 million in the quarter.

As a result of the above factors, Braskem recorded EBITDA of BRL 1.6 billion in the first quarter of 2014. In U.S. dollar, EBITDA came to USD 690 million. On a recurring basis, EBITDA was USD 573 million, or 9% higher than in the previous quarter. Net income was BRL 396 million, which benefitted from the divestment of the water treatment unit and from the improvement in operating performance.

The results achieved basically reflect the healthy performance of the global economy. Meanwhile, in Brazil, the environment calls for caution and remains challenging, especially with regard to the industry's level of competitiveness. The cost and availability of energy, the weak competitiveness of naphtha-based feedstocks compared to U.S. shale gas and issues related to infrastructure and slow economic growth will require additional measures to restore the competitiveness of the country's industrial sector.

INNOVATION AND INVESTMENT

The first quarter brought important recognition of Braskem's firm commitment to research and innovation. Braskem was the only Brazilian company to figure on the list of the world's 50 most innovative companies published by the magazine Fast Company, which was elected magazine of the year in the United States in the National Magazine Awards. Its research in products made from renewable resources, particularly the development of its bio-based Green Plastic, was the main factor responsible for Braskem's inclusion in the ranking among companies such as Google, Nike, Netflix and Airbnb.

Committed to making investments with returns above the cost of capital, Braskem invested BRL 763 million in the first quarter of the year. Of this amount, 50% was allocated to maintenance and to increasing the productivity and reliability of its assets, while 45% went to the construction of the new petrochemical complex in Mexico to produce polyethylene, whose physical completion reached 66% at the end of March.

Although still in the economic and technical feasibility phase, the Appalachian Shale Cracker Enterprise, or Ascent, has already made important progress. In March, an agreement was signed with Antero Resources, an independent company engaged in the exploration and production of natural gas and oil. Although still subject to the final investment decision, the agreement assures the project proximity to suppliers of competitive feedstock.

"The Mexico project has been advancing on schedule. Meanwhile, we continue to work on the feasibility studies for Ascent, a project in the United States that will use shale gas as feedstock, and in Brazil we continue to dialogue with Petrobras on the Comperj Petrochemical Complex. Diversifying our feedstock profile through new gas-based projects will help Braskem become more and more competitive," commented Carlos Fadigas, Braskem's CEO.